Konnect Ecosystem Series 02
Hello everyone!
Global Membership Konnect is the HUB that links the worlds of Web 2.0 and Web 3.0.
The first part of the series covered the global duty-free market and in Korea specifically. In this second part of the Konnect Ecosystem Series, we will explore how Korea’s duty-free has secured the top spot globally.
When I mention the Konnect project on ‘Korea’s duty-free industry reaches KRW 25 trillion in sales and 25% share of the global duty-free industry’, many people wonder how one country can reach such impressive numbers. Although the number of tourists to Korea has risen, there are several countries with a higher tourist count than Korea, yet even those countries do not match Korea’s duty free sales. What has caused Korea to become a dominant force in duty-free shopping?
The data above shows the number of individuals (both local and international) visiting and the sales made at duty-free shops within the country. The main point to remember is that despite the significant decrease in the number of tourists since 2020 because of the pandemic, the decrease in sales has not been substantial. In 2019, prior to the pandemic, the country welcomed 20 million foreign visitors, resulting in KRW 21 trillion in sales. However, amid the pandemic, the country only welcomed 640,000 foreign visitors, resulting in KRW 17 trillion in sales. It would be expected that sales would decrease in proportion to the decrease in foreign visitors, so why did sales only drop by 20% when visits decreased by 94%? The solution hinges on the ‘resellers’.
A reseller is someone who buys heavily discounted duty-free items from Korean duty-free stores and sells them through their own distribution channels in their home country. In Chinese, they are called ‘DaiGou’ which are agents, and they travel to Korea at least twice a month, buying an average of over $10,000 each time. A lot of these resellers are ‘WangHong’(Chinese influencers) who not only distribute the products they purchase but also sell them directly through live commerce to drive significant sales. As of 2021, Chinese resellers account for nearly 90% of the total Korean duty-free sales, generating KRW 15 trillion in sales out of the total KRW 17 trillion, making China the largest reseller market followed by Japan and Southeast Asia. Korea duty-free has become the top-ranked market in the global duty-free industry, thanks to its impressive sales numbers and the large presence of Chinese resellers. With the rise of K-POP and K-content, the reselling market is expanding not only in China but also in Japan and Southeast Asia.
In conclusion
Today, we have presented the ‘Korean duty-free market and resellers’, which serves as the primary basis of the Konnect project. In the following part, we will explore how Konnect connects the duty-free industry with resellers and how Konnect is enhancing its physical infrastructure on this.
Thank you.
